5 per cent GST without ITC for Kerala Houseboats

Kochi: Clearing confusion over the implementation of Goods and Services Tax (GST) in the houseboat sector, Government has made it clear that houseboats will attract GST under different slabs. A communique issued by G Vivekanand, Assistant Commissioner, Central Tax, Central Excise and Customs, Thiruvananthapuram Zone to Kerala Travel Mart (KTM) Society President Abraham George notes that if a houseboat owner also functions as a tour operator, the applicable GST rate would be 5 per cent without Input Tax Credit (ITC) or 18 per cent with ITC. “If the houseboat is functioning as a tour operator, ie, providing services of planning, scheduling, organising, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) then the principal supply would be that of a tour operator and they will come under the heading 9985 (support services). The applicable rate would be 5 per cent without ITC or 18 per cent with ITC,” it reads.

Vivekanand further said that it was a Central Government clarification and is applicable across the country. “In Jammu and Kashmir houseboats are mostly stationary. But in Kerala many houseboat operators are also functioning as tour operators. They offer sightseeing and other services along with providing accommodation. Such houseboats who also act as tour operators, will then be principally considered as a tour operator and the applicable GST will be 5 per cent without ITC or 18 per cent with ITC,” the officer added.

According to All Kerala Houseboat Owners’ Association, houseboats have already enrolled under GST regime. “After a lot of confusion government has made it clear that houseboats who act as tour operators come under the tour operator category and the applicable GST is 5 per cent without ITC. It is a welcome move. We have already enrolled under GST regime and are awaiting further response from the government,” said Josekutty Joseph, President, All Kerala Houseboats Owners’ Association.

However, the official note also clarifies that if the houseboats are used only for accommodation (stationary) services – then GST rates of 12 per cent, 18 per cent or 28 per cent are applicable. “If the houseboats are used only for accommodation services, they would be classifiable under heading 9963 (services by a hotel, inn, guest house, club or campsite). The GST rates applicable would be 12, 18 or 28 per cent based on the rack/published rates,” reads the clarification note. The note also clarifies that in case a tour operator books a houseboat, then the houseboat operator would charge GST and GST so charged will be available as ITC for tour operator, subject to the relevant provisions of law.

Prior to the implementation of GST, houseboat business was charged a service tax of 9 per cent along with luxury tax, which was under compounding scheme. There are around 1,100 registered houseboats in the State and together they provide employment to around 8,000 people. The annual turnover is pegged at around Rs. 630 crore. However, the houseboat industry is going through a lean patch of late. The liquor policy of the previous government combined with competition from Sri Lanka and unlicenced houseboats have made the industry struggling to stay afloat.